Borrowers open to exploitation over fees

 Providers of asset-based finance to small and medium-sized enterprises should declare an APR showing the true annual cost of the debt, just as lenders to consumers must do, campaigners say. The Campaign for Regulation of Asset Based Finance describes SME finance as “the next financial scandal in the making,” pointing out that large chunks of the sector are exempt from the sort of protections normally offered to consumer borrowers.

Asset-based finance, in which SMEs take on debt against assets ranging from plant and machinery to unpaid invoices, is at an all-time high, says the Asset Based Finance Association. But while new sources of SME funding have been welcomed, some fear businesses are vulnerable to exploitation. “Some lenders hide the true cost of this credit by advertising products using prices that either fail to include fees, or use rates for periods shorter than one year,” warned  James Sherwin-Smith, chief executive of Growth Street, who is backing  the campaign. “The lack of price clarity means firms are paying more than they should.”

http://www.independent.co.uk/news/business/sme/many-firms-are-on-a-collision-course-with-the-pensions-regulator-over-auto-enrolment-a6780791.html